Norsk Hydro posted better results in the second quarter of 2014 than in the same period last year on higher all-in aluminium prices and sales volumes, but earnings fell from the first quarter.

Underlying earnings before financial items and tax (Ebit) reached Nkr544 million ($87.8m) in the second quarter, up 5% from the second quarter in 2013 but a fall of 29% from the first quarter of this year.

London Metal Exchange aluminium prices averaged less than $1,800 per tonne in the second quarter, but were buttressed by record high aluminium premiums that put the all-in price above the industry’s marginal production costs.

“Aluminium demand continues to exceed production, resulting in a tight market, and we see the all-in metal prices at their highest levels since 2012,” ceo Svein Richard Brandtzæg, who will leave the company by February 2015, said in a statement.

Higher prices and sales volumes in bauxite & alumina were offset by negative currency moves and high energy costs, while sourcing and trading results hit metal markets earnings. Energy suffered from lower power production and lower prices.

“It has been an eventful quarter: We signed an agreement to take over the Søral primary plant and its products fit well with Hydro’s high premium casthouse strategy. We signed four power contracts, securing parts of our external power sourcing need after 2020. Also, Enova granted Hydro support to build the world’s most energy-efficient aluminium pilot,” Brandtzæg said.

“This is an important step for Hydro’s ambition to become carbon neutral by 2020 and a pillar in our strategy to develop the hydropower-based Norwegian aluminium portfolio”.

Hydro’s results were also improved by its stakes in downstream producer Sapa, where results improved owing to seasonally stronger sales volumes, and the Qatalum smelter in Qatar, which has “now achieved a cost position among the ten best aluminium plants in the world”, according to Brandtzæg.